MoCA announces 5% IGST on aircraft and engine parts

The Ministry of Civil Aviation has announced a uniform 5% Integrated Goods and Services Tax (IGST) rate for all aircraft and aircraft engine parts, effective from July 15th, 2024, said reports. “The introduction of a uniform 5 per cent IGST rate on MRO items is a major boost for the aviation sector. Previously, the varying GST rates of 5%,12%, 18%, and 28% on aircraft components created challenges, including an inverted duty structure and GST accumulation in MRO accounts. This new policy eliminates these disparities, simplifies the tax structure, and fosters growth in the MRO sector,” said Union Civil Aviation Minister Kinjrapu Rammohan Naidu in reports.  According to the International Air Transport Association (IATA), India’s aviation sector is poised to become the world’s third-largest air passenger market by 2030, surpassing China and the United States. The sector’s expanding demand is expected to increase the number of aircraft in operation to 1,100 planes by 2027 from the current fleet of 700, solidifying India’s position as one of the fastest-growing major aviation markets.